MassHousing recently adopted guidelines offering certain multifamily borrowers who have prepayment restrictions opportunities to refinance early at today's competitive interest rates. The new MassHousing Proactive Multifamily Preservation and Loan Prepayment Guidelines reflect MassHousing's desire to facilitate certain early prepayments where borrowers refinance with the Agency. We are committed to offering competitive loan products, including taxable and tax-exempt bonds insured under FHA Risk Share, 223(f) or 221(d)(4) programs. We are also able to arrange competitive funding via the AFL-CIO Housing Investment Trust, Fannie Mae and other sources. MassHousing is a MAP lender and Ginnie Mae issuer, and approved to participate in FHA's Tax Credit Pilot Program, which expedites closing on certain LIHTC deals. Interest rates will of course vary with the product and the market, but a loan closing today could have an interest rate of approximately 3.75%.
The Guidelines are targeted at loans with less than seven years remaining before maturity or less than five years remaining before they are eligible for as-of-right prepayment, and describe how transactions will be considered and prioritized. Participating loans that have not passed their statutory prepayment lockout period will still be able to participate under the Guidelines. Such loans are expected to be modified to require a 90% pay down. Proceeds adequate to pay off the remaining 10% would then be escrowed, and the mortgage would be discharged, though the note would remain outstanding and be paid down over time from the escrow proceeds. This strategy will be available to both for-profit and nonprofit borrowers.
Borrowers entering into new loans will need to extend affordability restrictions for at least 15 years. Accordingly, we hope this initiative will ensure preservation of affordability while capturing the favorable terms available in the current market and, in some cases, addressing deferred capital needs. Please contact Monte Stanford to determine whether and on what terms your property can be prepaid and refinanced.